Europeans push Gazprom for lower gas prices

Four clients have applied for revision of contracts with the Russian monopoly

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Gazprom’s four European clients have applied for revision of contracts with the Russian monopoly. Experts say that further decrease of prices for clients in the European Union may doubt effectiveness of Gazprom’s ambitions projects – Nord Stream and South Stream. Meanwhile, Gazprom continues its dispute with Czech’s RWE Transgas and accuses the Vienna Court of Arbitration of a bias.

France’s GdF Suez, Austria’s Econgas and Germany’s Wingas and WIEN have applied for revision of their contracts with the Russian supplier, the Novye Izvestia report Gazprom’s Deputy Director General Sergei Chelpanov as saying.

In January of last year, the newspaper writes, Gazprom reported correction of gas prices under contracts with GDF Suez (France), Wingas (Germany), SPP (Slovakia), Sinergie Italiane (Italy) and Econgas (Austria). The price was down by about ten percent. In March, similar agreements were reached with Italy’s Eni, in July – with Germany’s E.On. In July and August, the gas monopoly corrected the gas prices for Austria’s Centrex and for the Netherland’s Gas Terra. Thus, over the second quarter of the past year, Gazprom reported reimbursement to its European clients of 54,681 billion roubles. Those were discounts for the gas supplied earlier.

Thus, the newspaper writes, Russian taxpayers are responsible for failures of the state-run corporation, and in future the expenses are most likely to grow. First of all, as Gazprom, on the background of lower revenues, has launched the biggest ever constructions – those of the Nord Stream and the South Stream. The latter should eliminate Russia’s dependence on Ukraine, which share in Russia’s export of gas to Europe is about 50 percent. At the same time, the politics in the gas dispute between Moscow and Kiev has been above the economic reasons for quite a long now. The desire to press Ukraine coincided with lower demand for gas in Europe, which is experiencing economic problems.

Thus, the company is retreating in all directions, the Novye Izvestia writes. Europeans, being unhappy about the Russian gas monopoly’s high prices, succeed in negotiating discounts and are approaching their goals by using anti-monopoly authorities and courts. Gazprom is fighting to retain its positions, but has to retreat. Preliminary data show in 2012 the corporation’s production lowered by 4.9 percent to 488 billion cubic metres, and export – by 8 percent to 138 billion cubic metres.

“Europe’s chances for lower prices of the Russian natural gas are very high in the growing competition, and also due to growing supplies of liquefied natural gas,” the newspaper quotes Chief Economic of the Development Centre at the Higher School of Economics Valery Mironov as saying. “This lowers prices for natural gas supplied by pipelines. Thus, for Gazprom the situation is becoming worse.” The expert fears the Nord Stream and the South Stream, which the company is promoting, may be risky – they may be “traps worth billions of dollars.”

Gazprom said quite openly that European courts had considered it with bias, the RBC daily writes. The company is sure that by having supported Czech’s RWE Transgas the Vienna Arbitration violated norms of the European law, and the court’s reasons demonstrated clearly the anti-Gazprom moods. Gazprom plans to argue for its position at Vienna’s Commercial Court.

Decision of Vienna’s Court of Arbitration may become a legal precedent, thus it is important for Gazprom to have it cancelled, Deputy Director of the Centre of Political Technologies Alexei Makarkin said. The monopoly’s experience of cases at European courts is not big, he said, but Gazprom for the first time is accusing the court of a bias. It is not probable in countries of stable justice that the decision of Vienna’s Court of Arbitration may be renounced, Head of Art de Lex Maxim Sokolinsky said. An arbitration procedure does not depend on the state, and this is why it is valuable. “This is what the anti-Gazprom decision is all about – Gazprom’s application was rejected, but the court is unlikely to consider the view Femida had demonstrated a bias against the Russian supplier,” he said.